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A blog meant to share and track my analysis and investment decisions openly and for my own historic tracking. I'm just an average guy with a real job and this is something I do for fun and knowledge growth.

Weekly Portfolio Summary

So it's been a while since I've last done a weekly summary as I've been working to get caught up on fourth quarter reports. Now I'm back at it and I've got a lot to catch up on. It's been a wild few weeks with the various political events, the February jobs report being announced as much stronger than expected, and now the Fed has raised interest rates by another quarter percent. The market, overall, has contined its climb slightly, based off of earnings, but has recently leveled off more, not really going anywhere. Unfortunately, my portfolio can't say the same. The majority of my stocks have been relatively flat for the last few weeks. However, Ionis Pharmaceuticals has been gut wrenching. First it shot up on strong earnings results, then came the lastest phase 3 drug test results and a subsequent downgrade by Goldman Sachs and the stock has since taken quite the beating. Despite the rate hike of 25 basis points by the Fed this week, 10 year rates still went down and continue to oscillate between approximately 2.4% and 2.6%. This leads me to believe that both the rate increase was essentially baked in already as well as there seems to continue to be plenty of demand for these bonds. I do expect rates will increase over time, it just doesn't appear it'll be a rapid ascension. Overall, I consider this good for the markets and the economy at this time.Finally there's Oil. Prices did go up some this week, and production numbers were much lower than expected. While that is usually a bullish signal, there likely isn't a lot of oomph behind it as there are still very shaky agreements within OPEC regarding cutting overall production. Saudia Arabia, a country known to lead the OPEC group, has managed to cut their productions below agreed limits, however, they increased production compared to where they were at in January. Other countries like Iran, Iraq, and Russia have not gotten down to needed levels yet and if they don't work towards compliance, it's certain that the Arabians will continue to increase production to maintain market share. This is an important factor to a couple stocks I'm looking at to potentially add into my portfolio. I'll cover this more as I work to build out those portions of my site.There are no major events or conferences occurring that would impact my portfolio this week. It will, instead, be the leaf blowing in the wind of an overall set of market themes.

Notes:

Stock Ratings: 1 = buy at current stock prices, 2 = buy on a 5-10% dip in stock price, 3 = sell on a 5-10% increase in stock price, 4 = sell at current stock prices to raise cash. Ratings are based upon a combination of 12-18 month outlook on stock direction and market driven need for capital preservation or appreciation. The ratings may not necessarily directly results in moves I make due to financial positioning and cost basis.

Ones:

Ionis Pharmaceuticals (IONS, $40.22, -20.46%) - I chose this as my speculative stock to try to make significant gains in my portfolio. With the introduction of the AHCA, the healthcare industry has come back under some scrutiny regarding pricing concerns. This leaves them vulnerable to Presidential tweets and other impacts. At the same time, there recently has been some disappointing results on a few various drug test results, Ionis' Volanasorsen to be included in this mix, though less impactfully so. After last week's downgrade from Goldman Sachs, the stock has yet to have recovered, as I expected. Add onto that a rising interest rate environment, and future earnings also start looking more lucrative - thought commentary from Fed Chair Yellen maintained a "gradual" approach to rate increases which should be helpful. Healthcare needs to either get out of the current negative limelight and/or find some positive stories to help their cause. I'm not about to say this is a bad choice, at this point. The company has a lot of opportunities in front of it with their pipeline, but the overall market won't be terribly helpful. Despite the rather harsh hits the stock has taken over the last couple weeks, I was surprised to note that both the OBV and RSI were still in up trends on a longer term trend line. Sure they're retreating and this could be a roll over point, but I was expecting this kind of move would have something more dramatic. That said, MACD is negative on both charts and I'm seeing nothing that indicates the stock has sold off too much. The daily charts, on the other hand, are showing some oversold indicators and the downward movements do appear to be slowing down. The 200 DMA could be a reasonably strong floor in the $36 - $38 region. I'm estimating a 2017 earnings target of a $0.50 loss for next year, primarily due to ramp-up costs early on. My price target for 2017 is about $54. I feel like this stock is a buy, but more so only when it gets below $40 and only if you have patience to ride this turbulence out, as I expect the ascent from here to be slow. Ionis is 12.60% of my portfolio.

Twos:

Citigroup (C, $60.37, +44.52%) - I've held this bank for a long time as a play off a turnaround which seems to be taking shape. Focus has been on tax reform, regulation reform, and Fed rate hikes. These are seen as catalysts for future growth and has helped the stock reach the levels it's at. I do believe people are also overlooking international growth and that is Citigroup's ace in the hole, in comparison to most of its brethren. The stock remains a value, given its price is below the TBV, but that won't stop it from having pullbacks as it has been catching its breath lately. After their last quarterly report, there is some concern around their NIM estimates, though they appear exceptionally conservative - predicting no more rate hikes this year (and one has just happened). I'm also a little concerned in an oversupply of stock, which hopefully can be remedied by a combination of permission to buy back more stock and larger dividend payments. Citi's charts now show signs of a stock in the middle of a pause. In the multi-year charts, the MACD is flat and fluttering back and forth over its line while momentum has died down. The OBV and RSI continue to sit well on their positive trends, though. The weekly charts show the same trends as the multi-years, though, with stronger and flat momentum. The 50 DMA appears to be a floor around $59, and its a floor proving to be stronger than I originally thought, given the time its taking to reach it as well as the fact that factors like rate hikes are favorable to the stock's future. Daily charts show some weakness, with a RSI that's rolling over as well as down trending momentum and a MACD that's flat and crossing over negatively. That said, the RSI hasn't broken through its trend lines, so this might be a natural result of the pause. I still am very confident in Citi's long-term upward trajectory but believe this pause to be healthy for the stock. The next catalyst will be the results of the next CCAR, which should hopefully allow the company to return more capital to shareholders through dividends and buybacks. I'm targeting a 2017 TBV of $68 and am keeping my multiple at 1x TBV due to their latest report and overall market sentiment, thus a $68 price target. Citigroup is 16.21% of my portfolio.Cedar Fair (FUN, $68.09, +22.00%) - To try to play the strengthening US consumer while also protecting my portfolio with yield, I chose Cedar Fair on the theory that people are looking more for fun experiences to put their money as they decide to stay home more and feel more comfortable with an improving economy. 2016 resulted in record sales and there isn't anything, at this point, that has management believing the trend is changing. They continue to expand their Christmas celebrations and also look to expand or improve on hotel experiences as much of their attendance comes from a wider radius. This year, they're also looking to open a junior sports venue on its property next to one of its parks. Interest is already looking positive for new forms of cash flow. This year, the company feels confident that they will hit their $500M in EBITDA target, which is a year faster than originally planned. When looking into the technicals, I see a stock that's on a long term up trend, but may be in need of a small pause. All of the key long-term indicators are set up nicely, with a couple of them signaling overbought signs. The MACD, OBV, and RSI are all positive. There are similar indications in the weekly and daily charts, though the MACD is converging towards a bearish crossover. I'd say that my downside risk is still in the $62 - $65 range where $65 area has support by the 50 DMA. I estimate 2017 earnings of $3.57 and a multiple of 20. As such, the 2017 price target is $71.50, with and early 2018 EPS estimate of $3.93 and 2018 price target of $78. With a 5.08% yield, down side seems a bit more limited and I'd start buying when yield hits 5.5% (about $62.50). Rate increases by the Fed could cause the more unstable hands to pull out of the stock, creating buying opportunities. Cedar Fair is 16.76% of my portfolio.

Home Depot (HD, $149.60, +140.80%) - I chose this stock as a play on the housing and retail industries, expecting positive results from people taking advantage of an improving economy and home prices to invest in home building and improvements. I believe the concept of people wanting to spend more time at home has them investing more in the home. The stock was choppy to start the year, but recently it has started to breaking out on some positive news from home builders and the fact that a mostly local company, like Home Depot, is virtually safe from the protectionist and anti-trade commentary we've been hearing from the new President. The company is executing on its plan, taking share, and expect same store sales comps of 5%, which is pretty incredible for a company that isn't opening more stores and after the 2016 earnings results, I expect them to do that again, despite their own down played guidance. Additionally they have increased their share buyback plan and are now returning 55% of the prior year's earnings stream as dividends, up from its previous 50% mark. The charts are strong, perhaps a little too strong. We see strong upward trends everywhere we look, the prices MACD is very bullish in all three time perspectives (short, medium, long). That said, we are looking at a number a indicators that are in over bought territory in all three time views as well. I haven't seen this before and it's starting to make me a little cautious. That's because not only are these indicators overbought, but they've been that way for six weeks or more in many cases (Williams, Slow Stochastics, Money Flow). The RSI hasn't gotten over bought yet, but it's also close. This leads me to believe the upside in the short term is a bit limited. I'd exercise caution and consider if it makes sense to lock in some profits. I estimate 2017 earnings of $7.25. I estimate a multiple of 22, giving a 2017 price target of $159. I think this is a great company and operator, and you may want to consider picking up stock now or on any pull backs.HD is 13.39% of my portfolio.

Honeywell (HON, $127.16, +200.39%) - I continue to believe that this company is best of breed in the industrial conglomerate sector. It does a great job of spreading itself across short, medium, and long-term cycles, has a significant play into the aerospace cycle (commercial airplanes being a primary focus), and they have a management team with a track record of excellent execution. The aerospace division continues to be an area of concern lately with private jets, helicopters, and defense spending lagging expectations, but I believe this is a short-term event and management confirms this belief by stating improvements are expected to resonate come the second half of the year. While CEO Dave Cote is stepping down this month, I have a large amount of confidence in a smooth transition to Darius Adamczyk. It isn't typical to have such faith in transition, but this is a unique management team, very similar to what we saw when Home Depot went through their shift in new CEOs. Taking a look at the charts, this stock is just like Home Depot. It's been going on a major run for the last number of months to new highs. Much of this seems to be an index-related move as the stock has moved in line with both the S&P 500 and the Industrial index, though HON has broken out at a larger scale, likely due to the quality of the company. The OBV, RSI, and MACDs are all very strong and there are some other indicators sitting in over bought territory, however, only for a few weeks so far in the long-term charts. The stock is looking to be losing some energy and will likely pull back some before it can surge again. I'm hoping it can eek just a little bit higher, but I'll watch the price and overall action closely, as this pause in the stock has been well aligned with the general flatness of the market. Money flow into the stock is unsustainable and the daily MACD is surprisingly bearish, despite the overall action in the stock. The RSI has also gone through a pullback, but hasn't crossed the trend line. This looks like it'll be little more than a 3% pullback though, so I'd be looking for it to settle in around $123-$124. I anticipate 2017 earnings of $7.10 - anticipating that the company is currently being particularly cautious. I also think industrials are going to be able to fetch a stronger multiple if the economies of the world really do start firing on growth. Thus, I have set the multiple to 18, resulting in a 2017 price target of $128. 2018 EPS is estimated to be about $7.81 and have a price target around $145. HON is 17.07% of my portfolio.

On Semiconductor (ON, $15.25, +67.66%) - On Semi was a stock I chose long ago as a play into the tech industry. It's a leader in power saving for various technical devices. It completed the acquisition of Fairchild Semiconductor, which is meant to help expand their reach, capabilities and market share. With the increased synergies, they should be able to increase their value. The tech sector - semiconductors in particular - exploded for a little while with results from consolidation in the industry as well as some great reports from quarterly results. The high amount of debt the company has puts their balance sheet in some jeopardy, so this isn't exactly a best in breed stock. This hasn't been an impact on the stock surging higher as we continue to hit all time highs. Multi-year charts are very bullish with trends strongly positive in all indicators. There are a few that are overbought at this time, but they're starting to get under that level after a couple weeks of stagnation. The RSI and MACD still look positive with nothing particularly concerning yet. In fact, the OBV could be indicating a possibility for another leg up. The weekly charts are very similar, however, the strength stagnates in the dailies some. Here, the MACD is bearish, and the RSI is almost flat. My biggest concern is how steep this run up is in the long-term charts and the historical patterns it relates to. It's hard not to feel like we're reaching a peak in stock price, but with a stronger economy, that could be a head fake. At this time, the stock is well over my 2017 price estimate, though my estimate may actually be too cautious, given the overall environment. Now that I have more information, I estimate 2017 earnings to be $1.19 and currently estimate 2018 earnings to grow to $1.30. I still believe the right multiple for the stock is 13 times earnings due to the volatile nature of the stock. As such, that puts a 2017 price target of $15.50 and 2018 of $17. I have the stock at a 2 for its long-term prospects. That said, I feel the stock has moved too much, too fast and will continue to consolidate for a while. ON is 6.14% of my portfolio.

Pepsico (PEP, $111.39, +54.07%) - The epitome of a safety stock, this consumer packaged goods (CPG) company is in my portfolio not just for the safety it can provide when the stock market takes a dive, but also because the company has been performing extremely well on its promises. The company continues to outperform its peers (though calling Coke a peer is getting much more difficult) and posted nearly 4% organic growth against strong comps from 2015. Interest rates and foreign exchange rates continue to be problematic and is a reason why management delivered cautious guidance of "at least 3%" organic growth in 2017. They also increased their dividend, which helps keep the stock relevant against rate hikes. Recently the stock has been on the rise - even despite an increasing interest rate. It's somewhat baffling, but there are a lot of rumors around Kraft-Heinz being interested in an acquisition. I don't see Pepsico willing to play that game, but the stock is likely on the rise due to speculation there anyway. Shifting to the charts, things continue to look positive on the surface. A lot of the indicators are on positive trends. The OBV is positive in all three time perspectives as is the RSI. The multi-year RSI has even broken a long-term trend line to the upside. That said, in the multi-year view, we're seeing a number of indicators over bought with a few more not far off. The gap to over bought seems to have increased in the shorter time spans though, and the MACD of the daily charts is trying to cross back over to bullish from a short stint of going bearish. Generally speaking, the charts look relatively favorable, but the strength in these prices aren't likely sustainable. I feel this is a great stock to help diversify your portfolio and build over time into the weakness. I estimate 2017 earnings of $5.14. Because I believe the stock deserves a premium I'm setting the multiple to 21 and my 2017 price target to $108. It's important to note that in a likely raising rate environment, I anticipate more downside potential than upside and that I expect it will grow slower than the S&P 500. This is all about having a diversified portfolio and it will be a great stock in a mediocre sector. Should the market take a fall, this stock will have the ability to bolster me some. I would look at potentially buying more shares around $100. PEP is 9.97% of my portfolio.

Nothing on this site should be taken as advice, research, or an invitation to buy or sell any securities. All views expressed are solely of my own and I am not a professional money manager. Please consult with your financial adviser before taking any action in your own portfolio.